ECS (Electronic Clearing Services) was launched by the RBI in 1995. It is an electronic method of fund transfer from a bank to another bank.

ATM means automated teller machine.

(i) A Credit card is an Instrument which provides Credit facilities to its holder to purchase goods or services from Business establishments:
(ii) Bank issue Credit cards to customers and other eligible persons.

1. 'CORE' stands for 'Centralized Online Real time Exchange'.
2. In the centralized server of the bank, all the details of all the accounts of all the branches of the bank are available.
3. A customer can withdraw money through cheque at any branch of that bank throughout the world.
4. Similarly anyone can deposit money into the account.

1. NEFT- National Electronic Funds Transfer was launched by the RBI in 2005.
2. Under this electronic funds transfer system, bulk transfer of transactions are settled in batches during specific timings across India.
3. Individuals and institutions which maintain accounts with a NEFT enabled bank branch are eligible for using NEFT.

Diversified banking functions:
Competition in the banking industry has reduced their profits. Therefore the commercial banks started identifying and offering new and diversified financial services. They are purely other than banking services. Providing all such banking and other financial services is also called universal banking.

Secondary functions :
Apart from the basic or Primary functions commercial Banks render various other services which are known as Secondary functions. These services can be broadly classified into agency services and general utility services.
(1) Agency Functions:
Banks Act as agents of Customers and provide certain services. They are called Agency functions, which are as follows:
(a) Transfer of Funds:
Banks issue demand drafts, bankers' cheques, travelers' cheques, etc. and help in transfer of funds from one place to another. Customers need not carry cash. They can just forward the draft issued by the bank to the receiving institution. A small commission is collected by banks for this service.
(b) Periodic Payment of Premiums, Rent, etc.
After instruction from the customers, banks undertake the monthly payment of insurance premium, rent, telephone bill, etc. from the accounts of customers. Nowadays these payments are made through electronic clearing system facility offered by the banks.
(c) Collection and payment of cheques:
On behalf of customers bank collect the cheques deposited into the accounts of customers from other banks and deposit cash in the customers' accounts. Similarly cheques issued by a customer is honoured and the amount paid as directed by the customer.
(d) Acting as Executors, Trustees and Attorneys:
Banks act as executors of will of the customers and implement their will after their death. As a trustee a bank takes care of the funds of the customers Banker signs transfer deed of the properties of the customers in the capacity of attorney to customers.
(e) Conduct share market transactions:
A Demat account should be opened with Depository Participant and that demat account should be linked with savings bank account by the customer. Then the customer can ask the bank to conduct online purchase or sale of securities, on behalf him.
(f) Preparation of Income tax return :
Banks prepare the Annual Income Tax return on behalf of the customers and provide Income tax related advices to them.
(g) Dealing in Foreign Exchange :
Banks buy and sell Foreign currencies on behalf of customers.
(h) Acting as Correspondent· :
Banks Act as Correspondent of customers and receive Travel Ticket, Passport, etc
(2) General Utility Functions :
In addition to primary, secondary and agency functions, commercial Banks offer some services for the general welfare of the customers. They are called general utility services. They are as follows.
(a) Issue of demand drafts and Banker's cheques:
Demand drafts and banker's cheques are issued to public and customers as well. Instead of sending money they can attach these instruments for payment of educational fees, etc.
(b) Accepting Bill of exchange on behalf of Customers:
Banks accept Bills on behalf of customers and make payments to the foreign exporter. Afterwards, the bank collect from the customers
(c) Safety Lockers :
Valuable documents, jewels etc. can be kept safely in a vault provided by Bank for a Rent. These vaults room is called "Strong Room".
(d) Letters of Credit:
This Document is given by bank on behalf of importing customer to the Exporter guaranteeing payment for the Imported goods. It is a very important document in International trade.
(e) Travellers Cheques:
Customers need not carry cash during travel in India or abroad. The denomination and words are printed in the cheque. It is accepted as money in shops, hotels, travel agencies, etc.
(f) Gift Cheques:
These denomination printed cheques are available in attractive design so that it can be presented during Wedding, Birthday Functions, etc.
(g) Reference Service:
Business firms can give their Bank's name as reference to the new Business Institution with which they want to establish commercial relationship. Banks willingly act as referees and provide information about the financial standing of their customers.

PRIMARY FUNCTIONS:
The primary functions of a commercial bank are of three types. They are:
i. Accepting Deposits
ii. Granting Loans and Advances
iii. Creation of Credit
1. Accepting Deposits:
The basic deposit accounts offered by commercial banks are listed below. In these days banks compete with each other to attract customers by adding facilities to these deposit accounts. Broadly deposit accounts can be classified into demand deposits and time deposits.
A.Demand Deposits :
These deposits are repayable on demand on any day. This consists of savings deposits and current deposits.
a) Savings Deposits:
General public deposit their savings into this account. This account can be opened in one individual's name or more than one name. Section 25 companies also can open savings accounts. Whereas Business firms are not permitted to open savings account.
b) Current Deposits:
This account is suitable for business institutions. Individuals too can open this account. A higher minimum balance should be kept in this account. If not penal interest is charged. No interest is paid for the balance in this account.
B.Time Deposits:
They include fixed deposits and recurring deposits which are repayable after a period.
a) Fixed Deposits (FD):
Certain amount is deposited for a fixed period for a fixed rate of interest. FDR (fixed deposit receipt) is given to the depositor. Rate of interest is higher than savings account. On the date of maturity the principal along with interest for the fixed period is paid. A customer can obtain loan by depositing FDR.
b) Recurring Deposits (RD):
Certain sum is deposited into the account every month for one year or five years or the agreed period. Interest rate is more than savings deposits and almost equal to fixed deposits. At the end of the period the deposited amounts along with interest are returned to the customer.
2. Granting Loans and Advances:
The second primary function of commercial banks is lending money in order to earn interest income. Banks provide specific sums as loans which are repayable along with interest. Demand loans should be repaid whenever demanded. Term loans can be repaid after the agreed period. Advances are credit facilities provided for short period (within a year) to business community. But both terms are used interchangeably.
A. Advances:
a) Overdraft:
It is a credit facility extended mostly to current account holding business community customers. It is an arrangement reached between the banker and the credit worthy customers.
b) Cash Credit:
It is a secured credit facility given mostly to business institutions. Stock in hand, raw materials, other tangible assets, etc. are provided as collateral. A certain sum is allowed as credit for a short period.
c) Discounting of Bills:
Business customers approach banks to discount the commercial bills of exchanges and provide money. It is a short term credit instrument. Banks deduct the discount (interest) for the period mentioned in the bill and release the balance amount to the traders.
B.Loans:
Short term and medium term loans are provided by commercial banks against eligible collaterals to business concerns. It is a definite sum of money lent for a definite period. It is repayable in one lump sum or in instalments. Interest is payable on the entire loan amount. Generally commercial banks provide the following loans.
a) Housing Loan:
Taking the title deeds of the house as collateral security, based on the monthly income of the borrowing customer, banks advance medium and long term loans. The customer has to repay the loan in equated monthly instalments (EMI consists of principal and interest).
b) Consumer Loans:
Consumer durables like refrigerator, air conditioner, laptop, washing machine, television, etc. can be purchased by customers with consumer loans from banks. The product purchased is hypothecated (secured loan arrangement where the movable asset remains with the borrower) as security for the consumer loan amount. The customer pays in equated monthly instalments for a specified period.
c) Vehicle Loans:
Two wheelers, cars, buses and other vehicles can be purchased by individuals as well as institutions obtaining vehicle loans from the banks. Vehicles are hypothecated to the bank until the entire loan amount is repaid. Vehicle registration book is deposited with the bank and on full payment of loan amount it will be handed over to the customer.
d) Educational Loan:
Loan is provided by banks to students for studying undergraduate, post graduate or professional courses. Loan may be received in instalments to pay the educational fees every year. After completion of the course one year is allowed for the student to get employed. Afterwards, the student should repay the loan with interest for the entire period. Interest is charged from the date of first instalment of loan amount payment.
e) Jewel Loan:
Customers pledge their gold jewels and obtain loans from banks. The margin (percentage of value per gram that can be given as credit) requirement is fixed by the RBI. Interest should be paid every month. Otherwise interest on interest is charged. Within 12 months the customer can redeem or else can re-pledge. Jewels not redeemed even after reminders are sold in auction by banks to recover their dues.
3. Creation of Credit:
Apart from the currency money issued by the RBI, the credit money in circulation created by commercial banks influence economic activities of a country to a large extent. Credit money of commercial banks is far greater in volume than the currency money. The volume, the purposes and the sector to which this credit money is to be channelised - all these are implemented by commercial banks under the guidance of the RBI.